The long-run Phillips curve is
A. upward sloping.
B. horizontal.
C. downward sloping.
D. vertical.
Answer: D
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The price elasticity of demand is a measure of:
A. the change in quantity demanded of a good that results from a change in its price. B. the demand for a good. C. how consumers respond to excess demand. D. the change in price of a good that results from a change in its quantity demanded.
Suppose a basket of goods costs $400 in the United States and £200 in Britain. If the exchange rate is $1/pound, what will happen in the foreign exchange market, according to the purchasing power parity theory?
a. The market will go further out of equilibrium because of increased activity. b. An increase in demand for pounds will lead to an increase in the price of pounds. c. An increase in demand for dollars will lead to an increase in the price of dollars. d. An increase in demand for dollars will lead to a decrease in the price of dollars. e. An increase in demand for pounds will lead to a decrease in the price of pounds.
Suppose studies showed that 12 percent of all teens choose to participate in underage drinking. If policymakers wish to reduce the amount of underage drinking, they should:
A. not share that statistic, and let teens think that it's a huge problem with all teens. B. Informing them will have no impact on their individual behavior. C. let teens know that the great majority of teens currently do not drink. D. The statistic is likely to influence their personal decision, but it is impossible to predict in what way without more information.
Nonunion labor is a substitute for union labor, so when the minimum wage ________, the demand for union labor ________
A) rises; decreases B) decreases; increases C) decreases; decreases D) rises; increases E) rises; remains the same